Fitch Ratings-London-09 January 2012: Fitch Ratings has affirmed Zurich Insurance Company's (ZIC) Insurer Financial Strength (IFS) rating at 'A+' and Long-term Issuer Default Rating (IDR) at 'A'. The Outlook is Stable. ZIC is the core part of the Zurich Financial Services (ZFS) group.

Fitch has assigned a 'A' rating to ZIC's CHF450m six-year senior notes and CHF250m 10-year senior notes issued in July 2011, as well as the CHF525m seven-year senior notes issuance completed on the 23rd of November 2011. A full list of rating actions is provided at the end of this release.

The rating rationale for the affirmation is based on ZFS's solid capital position that remained stable over the first nine month of 2011. Furthermore, earnings generation continues to be strong despite the high incidence of losses in 2011 relating to natural catastrophes. Fitch considers the exposure to peripheral eurozone bonds within ZFS's investment portfolio as manageable. Offsetting factors are the company's relatively high amount of goodwill and intangibles and the headwinds the company faces due to the difficult economic environment, competitive market conditions and challenging capital markets.

The key rating drivers that could result in an upgrade include:

-- Continued improvements in the resilience and volatility of ZFS's capital position as measured by Fitch's stress tests and maintenance of current capital levels with continued strong operating earnings in line with higher-rated peers; The key rating drivers that could result in a downgrade include:

--A sustained drop in the company's risk-adjusted capital position or a drop in shareholders' funds by 20%;

--Failure to maintain a disciplined underwriting approach;

--Prior-year adverse reserve development greater than USD500m;

--Increase in the ratio of adjusted debt to total capital, to above 30%;

--Any large acquisition that weakens capitalisation or increases financial leverage or is outside the

company's historical risk appetite or area of expertise.

The rating actions are as follows:

ZIC's CHF450m 2.25% senior debt issue due 2017 assigned a 'A' rating;

ZIC's CHF250m 2.875% senior debt issue due 2021 assigned a 'A' rating;

ZIC's CHF525m 2.375% senior debt issue due 2018 assigned a 'A' rating;

ZIC's CHF500m 3.75% senior debt issue due 2013 affirmed at 'A';

Zurich Finance (Luxembourg) S.A. USD750m 3.25% senior debt issue due 2013, affirmed at 'A'

Zurich Finance (USA) Inc's EUR1bn 4.5% senior debt issue due 2014, guaranteed by ZIC, affirmed at 'A';

Zurich Finance (USA) Inc's EUR800m 4.875% EUR800m senior debt issue due 2012, guaranteed by ZIC, affirmed at 'A';

Zurich Finance (USA) Inc's EUR600m 6.5% EUR600m senior debt issue due 2015, guaranteed by ZIC, affirmed at 'A';

ZIC's CHF500m 4.625% subordinated debt issue affirmed at 'BBB+'

ZIC's 4.25% CHF700m subordinated debt issue affirmed at 'BBB+';

Zurich Finance (UK) plc's GBP450m 6.625% undated subordinated fixed-rate reset bonds, guaranteed on a subordinated basis by ZIC, affirmed at 'BBB+';

Zurich Finance (USA) Inc's EUR500m 5.75% subordinated fixed- to floating-rate notes due 2023, guaranteed on a subordinated basis by ZIC, affirmed at 'BBB+';

Zurich Finance (USA) Inc's EUR500m 4.5% fixed- to floating-rate notes debt issue due 2025, guaranteed on a subordinated basis by ZIC, affirmed at 'BBB+';

ZFS Finance (USA) Trust II's USD700m 6.45% fixed- to floating-rate securities due 2065, with subordinated support agreement from ZFS and ZGH, affirmed at 'BBB+';

ZFS Finance (USA) Trust IV's USD500m 5.875% fixed- to floating-rate securities due 2062, with subordinated support agreement from ZFS and ZGH, floating coupon step-up after five years, affirmed at 'BBB+';

ZFS Finance (USA) Trust V's USD1bn 6.5% fixed- to floating-rate securities due 2067, with subordinated support agreement from ZFS and ZGH, floating coupon step-up after ten years, affirmed at 'BBB+';

Cloverie plc EUR425m 7.5% fixed- to floating-rate securities due 2039, floating coupon step-up after ten years, guaranteed by ZIC, affirmed at 'BBB+'.